U.S. Launches Probe of Hitachi Chip Pricing
The U.S. Justice Department has launched an antitrust investigation to determine whether Japanese electronics giant Hitachi Ltd. has engaged in predatory pricing of the semiconductor chips it sells in the United States.
The existence of the probe was disclosed Tuesday here in the heart of Silicon Valley by U.S. Sen. Pete Wilson (R-Calif.) at a hearing on trade practices of Japanese computer-chip companies.
Wilson and three other U.S. senators had called for a probe of Hitachi’s pricing practices in June after the surfacing of a Hitachi America document. The memo to the U.S. unit’s distributors urged them to aggressively cut prices for certain types of computer-memory chips.
The document reads in part: “Win with the 10% rule. Find AMD and Intel sockets. Quote 10% below their price. If they requote, go 10% again. Don’t quit till you win!”
AMD, which stands for Advanced Micro Devices, and Intel Corp. are leading U.S. competitors of Hitachi.
Hitachi has disavowed the memo, claiming that the idea was conceived by three low-level marketing employees “without the knowledge, let alone the approval” of the company’s top management. The company said it took steps to ensure that the notice was disregarded by distributors.
Hitachi officials couldn’t be reached for comment Tuesday, but they have consistently denied engaging in predatory pricing.
The Justice Department’s antitrust probe has started amid heightened trade tensions between the United States and Japan.
“The antitrust division has opened an investigation into possible predatory conduct by Hitachi, and is actively pursuing it,” according to an Aug. 2 letter to Wilson from Charles F. Rule, the acting assistant attorney general who heads the antitrust division.
“While predation is often quite difficult to establish, the division takes seriously any credible allegation of predatory behavior in U.S. markets and is fully prepared to proceed against such conduct when warranted by the facts,” the letter continues.
The U.S. semiconductor industry has recently called on the government to force Japan to open its market to U.S. chips. The antitrust investigation could signal that the Reagan Administration is losing patience with the Japanese, despite recent Japanese promises of concessions. The U.S. trade deficit with Japan is expected to reach $50 billion this year.
Hitachi’s aggressive behavior has led to previous legal entanglements in the United States.
In 1982, the U.S. Justice Department filed criminal charges against the company as a result of an FBI operation that uncovered a Hitachi plot to obtain and transport stolen IBM materials to Japan. The company eventually pleaded guilty and was fined the maximum $10,000.
Hitachi has recently sought to dampen rising protectionist sentiment in this country by promising to buy $120 million of U.S. goods over the next year. But at the hearing here Tuesday, two U.S. semiconductor executives dismissed the pledge.
“It’s a grandstand play,” said Charles E. Sporck, president and chief executive of National Semiconductor Corp. George M. Scalise, senior vice president of Advanced Micro Devices, said that “there is no substance” to Hitachi’s pledge.
